Q3 Operating Profit Up 457% Year-on-Year
Defense Sector Up 715% in Same Period
Hanwha Aerospace achieved its highest-ever quarterly performance, driven by strong results in its defense sector.
Hanwha Aerospace announced on the 31st that it recorded consolidated sales of 2.6312 trillion KRW and operating profit of 477.2 billion KRW in the third quarter of this year. Compared to the same period last year, sales increased by 62% and operating profit surged by 457%. Although sales slightly decreased compared to the previous quarter due to the spin-off of Hanwha Industrial Solutions last month, operating profit reached a record high for a quarter thanks to the solid profitability of the defense sector.
By business segment, the defense sector achieved sales of 1.656 trillion KRW and operating profit of 439.9 billion KRW, marking increases of 117% and 715% respectively compared to the same period last year, and recording the highest quarterly operating profit. The exports of the Poland K9 and Chunmoo, which began in earnest from the second quarter, continued into the third quarter, and domestic business also started full-scale mass production, driving the performance.
Hanwha Aerospace expects to fully meet its target delivery volumes for the K9 and Chunmoo this year. The plan is to export 60 units of K9 and 30 units of Chunmoo respectively, and with 37 Chunmoo units already delivered, the annual target volume has been surpassed. During the earnings conference call, Hanwha Aerospace stated, "We expect to deliver more than 40 Chunmoo units by the end of the year, and the K9 is also expected to exceed 60 units exported by the fourth quarter."
The company forecasted even stronger performance in the fourth quarter and next year. Hanwha Aerospace explained, "We are currently preparing the management plan for next year, and we expect the delivery volumes of K9 and Chunmoo to increase compared to this year. In that regard, profits are likely to grow more in the third quarter than the second quarter, and more in next year than the fourth quarter."
They added, "Recently, the delivery volumes have rapidly increased in a short period, causing working capital to rise significantly in the third and fourth quarters. Next year, since a steady amount of deliveries is scheduled each quarter, net borrowings are expected to peak this year and then decline."
Regarding the remaining volumes for Poland, the company stated, "We plan to localize 2-3 remaining contracts in Europe. However, the Crab and K9 self-propelled howitzers are separate, and for the K9, we are focusing on ways to utilize local production sites within the European market."
The aerospace business recorded sales of 477.9 billion KRW, a 22% increase compared to the same period last year, but posted an operating loss of 6 billion KRW due to losses reflected from participation in the development of the GTF engine in the RSP format, turning the segment into a deficit.
Subsidiary Hanwha Systems posted sales of 639.2 billion KRW and operating profit of 57 billion KRW, a 44% increase compared to the same period last year. Setrec Eye, in which Hanwha Aerospace has invested equity, also achieved sales of 43.7 billion KRW and operating profit of 800 million KRW in the third quarter, successfully returning to profitability.
A company official said, "Exports to Poland and expansion of domestic volumes are expected to be reflected in the fourth quarter results as well. We will focus the company's full capabilities on the defense sector and strengthen global competitiveness as well as domestic demand to grow into an export-driven company."
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